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News & Portal: VAT

Vat Flat Rate Scheme new rates

27 July 2020  
Posted by: HMRC
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Contents

 

  1. Overview 
  2. Join or leave the scheme 
  3. Eligibility 
  4. Work out your flat rate 

 

Work out your flat rate 

The VAT flat rate you use usually depends on your business type. You may pay a different rate if you only spend a small amount on goods.

You get a 1% discount if you’re in your first year as a VAT-registered business.

 

If you spend a small amount on goods

You’re classed as a ‘limited cost business’ if your goods cost less than either:

  • 2% of your turnover
  • £1,000 a year (if your costs are more than 2%)

This means you pay a higher rate of 16.5%. You can calculate if you need to pay the higher rate and work out which goods count as costs.

If you are not a limited cost business, you use your business type to work out your flat rate.

 

Flat rates for types of business

Because of coronavirus (COVID-19) the flat rate for catering (including restaurants and takeaways), accommodation and pubs has been reduced from 15 July to 12 January 2021.

 

 Type of Business Current VAT flat rate (%)
 Accountancy or book-keeping 14.5
Advertising 11 
 Agricultural services 11
 Any other activity not listed elsewhere 12
 Architect, civil and structural engineer or surveyor 14.5
 Boarding or care of animals 12
 Business services not listed elsewhere 12
 Catering services including restaurants and takeaways before 15 July 2020 and after 12 January 2021 12.5
 Catering services including restaurants and takeaways between 15 July 2020 and 12 January 2021  4.5
 Computer and IT consultancy or data processing 14.5
 Computer repair services 10.5
 Entertainment or journalism 12.5
 Estate agency or property management services 12
 Farming or agricultural not listed elsewhere 12
 Film, radio, television or video production 13
 Financial services 13.5
 Forestry or fishing 10.5
 General building or construction services* 9.5
 Hairdressing or other beauty treatment services 13
 Hiring or renting goods 9.5
 Hotel or accommodation before 15 July 2020 and after 12 January 2021 10.5
 Hotel or accommodation between 15 July 2020 and 12 January 2021  0
 Investigation or security 12
Labour - only building or construction services* 14.5
 Laundry or dry-cleaning services 12
Lawyer or legal services 14.5
Library, archive, museum or other cultural activity 9.5
Management consultancy 14
Manufacturing fabricated metal products 10.5
Manufacturing food 9
Manufacturing not listed elsewhere 9.5
Manufacturing yarn, textiles or clothing 9
Membership organisation 8
Mining or quarrying 10
Packaging 9
Photography 11
Post offices 5
Printing 8.5
Publishing  11
Pubs before 15 July 200 and after 12 January 2021 6.5
Pubs between 15 July 200 and 12 January 2021  1
Real estate activity not listed elsewhere 14
Repairing personal or household goods 10
Repairing vehicles  8.5
Retailing food, confectionery, tobacco, newspapers or children's clothing 4
Retailing pharmaceuticals, medical goods, cosmetics or toiletries 8
Retailing not listed elsewhere 7.5
Retailing vehicles or fuel 6.5
Secretarial services inc
 Social work 11
Sport or recreation 8.5
Transport or storage, including couriers, freight, removals and taxis 10
Travel agency 10.5
Veterinary medicine 11
Wholesaling agricultural products 8
Wholesaling foods 7.5
Wholesaling not included elsewhere 8.5

*‘Labour-only building or construction services’ means building services where the value of the materials supplied is less than 10% of the turnover for those services. If more than this amount, the business is classed as ‘General building or construction services’.

 

What you pay

You calculate the tax you pay by multiplying your VAT flat rate by your ‘VAT inclusive turnover’.

Example - You bill a customer for £1,000, adding VAT at 20% to make £1,200 in total.

You’re a photographer, so the VAT flat rate for your business is 11%.

Your flat rate payment will be 11% of £1,200, or £132.

VAT inclusive turnover is different from standard VAT turnover. As well as business income (such as from sales), it includes the VAT paid on that income.

Calculating 2 flat rates

The first calculation should start from day one of your accounting period to the last day of that flat rate. The second should start from the date of the new flat rate to the end of your accounting period.

 

Get help

Call the VAT Helpline if you have any questions about the Flat Rate Scheme.

 


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